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States Of Flux

This column from The American Prospect was written by Jared Bernstein.

Don't despair, progressives. I bring a message of hope, and it comes from those renowned laboratories of democracy: the states.

I just returned from the annual meeting of the Economic Analysis and Research Network, or EARN, as we call it around here. EARN is a collaboration of progressive state-level organizations engaged in research and advocacy, and the message from this year's meeting was crystal clear: If anything good happens, it's going to happen in the states.
The Economic Policy Institute helps to run the EARN network, and its director here at EPI is Michael Ettlinger. Michael was kind enough to grant me an interview for this story (translation: I mugged him at the water cooler).

Michael's case -- that the states are where the action is -- builds off the contention that the next four years promise to be especially tough here in Washington. Many of the resources of nationally oriented groups will be consumed by pushing back against really bad ideas like social-security privatization and making the tax cuts permanent. It's hard to imagine that we'll be playing much offense.

On the other hand, there are some very good ideas -- discussed below -- percolating in the states (and some very bad ones too, of course). Michael argues that these ideas have two potentially important payoffs. First, they can improve the economic fortunes of those they reach. Higher minimum wages, better education, access to health care -- if any public entity can deliver these over the next few years, it's highly unlikely to be the feds.
Second, these actions set the stage for a counterattack on the notion that government is nothing but a negative force. (Remember President George W. Bush's assertion that John Kerry's health plan had to be bad news because it came from government? And remember Kerry's staunch -- and disingenuous -- denial that government had anything to do with it?) Mike's hope is that "policies that solve people's problems will be coming from the states." And maybe this can help restore faith in government solutions.

Even a brief survey of what's going on in the states is beyond my scope in this context, but here are a few choice examples:

Minimum Wages: We all know that Nevada and Florida, two red states, both overwhelmingly voted to raise their minimum wages, even though opponents outspent progressives by at least two to one, and Bush carried both states. And as if to send a message that EARN is on the right track, as I was writing this piece, an e-mail flashed across my screen with the news that the New York State legislature just overrode Governor George Pataki's veto of a higher state minimum; Washington, D.C., also followed suit, with a two-step increase up to $7. If that isn't enough, my 82-year-old Democratic-activist mother called last weekend to ask me if I thought Arizona was ripe for a minimum-wage fight (I couldn't see why not).

Health Insurance: On November 2, California came pretty close to passing a "pay or play" health insurance initiative that would have required employers to either provide health coverage for their workers or pay into a state fund to purchase private care for those without employer-provided coverage. The proposition lost 51 percent to 49 percent, as advocates were heavily outspent by business interests. But supporters of the plan are well aware of how close they came, and they will be back -- especially if the number of uninsured in the state continues to climb.

It's widely known that the California electorate bucked Bush Administration policy when it voted to invest public dollars in stem cell research. Less well known is that they approved an additional 1 percent tax on income over $1 million in order to fund mental health services for children, adults, and seniors who are either uncovered or whose insurance fails to cover mental health. Raising taxes to fund mental health is not exactly at the heart of Bush's second-term agenda.

Unemployment Insurance: Although long-term unemployment remains a significant problem, congressional Republicans have blocked recent efforts to extend UI benefits. At the state level, however, a movement is underway to reshape and update the program to conform to the realities of today's workforce. Twenty states have agreed to count recent earnings when determining eligibility for UI benefits, one of the best ways to increase access among low-wage workers and those with less labor market experience.

While Bush's Labor Department was busy reducing the right to overtime pay, more states agreed to provide UI benefits to part-time workers and to those who left their jobs to escape domestic violence. And regarding overtime, several states, led by Illinois, are decoupling from the federal wage and hour laws to preserve overtime rights for the employees who lose under the new federal rules.

Some other hot policy areas to watch are paid family and medical leave (the federal version comes without pay), initiatives in early childhood education, economic development, and the type of work supports associated with welfare reform (like subsidized child care).

That's the good news.

The bad news is that conservative activists are not content merely to control all the branches of the federal government. They're just as active at the state level. Part of their efforts are, of course, digging into deep pockets to fight against all of the above, but they're also proactive. One of their goals is to privatize publicly provided services (including education), but they've also been busy blocking the high road by passing preemption laws on minimum and living wages, identifying certain groups (e.g., temp workers) as ineligible for UI, and -- shudder -- promoting TABOR initiatives (the so-called "taxpayer bill of rights"). These measures typically restrict a state government's ability to raise revenues, regardless of need or circumstance. Colorado passed such a measure in 1992, limiting revenue growth to that of population growth plus inflation and requiring voter approval for any new tax or debt increase. TABOR was, as noted by the Center for Budget and Policy Priorities: "...the main reason why...two detailed, 50-state studies in 1999 and 2001 ranked Colorado's finances as among the worst-managed in the country." The measure also left the state unable to enact necessary countercyclical policies to deal with the recent downturn.

So yes, in the coming years the states are going to be the laboratories for useful experiments with policies that might solve some of our economic and social problems -- problems likely to be exacerbated by what comes out of Washington. Of course, some labs are staffed by mad scientists, and we'll have to play defense at all levels of government.

But our backs won't always be against the wall, and why not use these coming years to figure out what works best? Those lessons can then inform a national progressive agenda that inspires our base and beyond.

Jared Bernstein is a senior economist at the Economic Policy Institute in Washington, D.C. Sujan Vasavada and Amy Chasanov provided helpful research for this article. For more information on EARN, go to

By Jared Bernstein
Reprinted with permission from The American Prospect, 5 Broad Street, Boston, MA 02109. All rights reserved

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